Article

“New pay target will be a boost for female executives” - IoD

11 Aug 2015

The Institute of Directors has today (10 August 2015) welcomed reports that the Davies Review will address the gender pay gap at the top of British companies and increase the number of women in senior executive management positions.

“Meeting the 25 per cent target for female representation on boards was only ever meant to be the first step, and it’s absolutely right that the focus is now on trying to increase the number of women in senior executive positions. Non-executive positions were the low-hanging fruit, and now they’ve been picked, companies are going to have to think much harder about how they are going to address the gender imbalance in top management positions.

“A target, rather than regulation, is definitely the right approach. We’ve seen that boards do respond to targets, and if the pressure on them from politicians, the media, and the rest of the business community is maintained, we are confident that this vital pipeline of female executive talent can be created. The Davies Review will have to make sure its proposals for a target to have women in 25 per cent of the top-earning roles are simple and easy to understand. Crucially, they have to be realistic about the time-scale.

“A better gender balance in senior roles will be the natural result of more targeted training and development schemes inside companies. To equip women so they can climb the ladder from the most junior to the most senior role takes not only the proper support and guidance, but time. This is a decade-long process, and any deadlines or target dates must recognise this. Too short a time-frame could lead to tokenistic promotions, rather than fundamental and sustainable change.

“Moreover, the review needs to define what is meant by ‘senior’ and ‘best paid’ since the two don’t always go hand in hand. Many roles, such as company secretaries or communications directors are some of the most important and powerful in FTSE companies, yet their salaries pale in comparison to the amounts paid to some executives once LTIPs, bonuses, commission, share schemes and pensions are taken into account.”